Tax pros rate the season so far: ‘Much busier, much sooner’
The main impact of the Tax Cuts and Jobs Act won’t be felt on tax returns until next year – but it’s already having a big impact on tax preparers.
“I’ve been preparing taxes for 39 years and this is one of the most unusual season!” said Gail Rosen, a CPA and shareholder at Wilkin & Guttenplan, in Martinsville, N.J. “We must be thinking about 2018 taxes for clients as we prepare their 2017 returns.”
“Much busier, much sooner,” said Laurie Ziegler, an Enrolled Agent at Sass Accounting, in Saukville, Wis. “Maybe that’s in reaction to the public urging of filing earlier to try and beat the identity-theft scammers. It may also be because of wanting to know about the changes in the tax law as soon as possible, as some have already seen changes in their federal withholding on their paychecks and are concerned as to how it will affect their 2018 returns.”
More clients and potential clients are calling for appointments after they’ve done their own taxes, said Helen O’Planick, an EA at HELJAN Associates in Manchester, Pa. “The laws have gotten more complex and [clients] are combining a lot of things in their heads and not wanting to get into IRS hot water.”
“Clients are calling and emailing with tax questions in unprecedented numbers. Almost 100 contacts from current clients from Dec. 18 on, almost all related to how 2018 taxes will be different from 2017 and what can they do to be proactive about it,” said Brian Stoner, a CPA in Burbank, Calif. “Clients are scheduling tax appointments sooner. February booked up quicker than ever before.”
Not everyone is seeing change, though. “Nothing unusual about the season at all,” reported Morris Armstrong, an EA and registered investment advisor with Armstrong Financial Strategies in Cheshire, Conn. “My clients know that the laws passed in December take effect with next year’s return. My software program does provide a tax impact statement which shows them how they would fare in the new laws were in effect now. So far, they adore Trump!”
New this year: not only the four little letters of the reform act, but subsequent congressional actions as well.
This tax season is indeed unusual due to the recently enacted Tax Cuts and Jobs Act and also the tax-related provisions in the 2018 Balanced Budget Act, said Phyllis Jo Kubey, an EA in New York. “I’ve been including tax projections for my clients as part of their preparation for years, but this year these projections are particularly important and involve a lot of additional analysis.”
Kubey is looking at pay stubs for appropriate withholding adjustments and at IRC 199A pass-through deductions, as well as offering planning advice. “I have many clients who are deeply affected by the elimination of unreimbursed employee business expenses, so I’m offering suggestions on how they might approach their employers about accountable reimbursement plans,” she said. “Unfortunately, many of these taxpayers work under multi-year union contracts, and they have no recourse until the next contract is negotiated. Also in the back of everyone’s mind is that, barring any changes or extensions, many of these provisions sunset in the not-too-distant future.”
“For the first time I can remember, many clients come into their tax preparation appointment with many questions about their future tax returns rather than the current-year return we’re preparing,” said Jeffrey Gentner, an EA in Amherst, N.Y.
Gentner said that the TCJA has generated a predictable amount of discussion, “but the bottom line for most of our clients is that they only want to know if they’re better or worse off. A projection calculator built into our tax software shows how the 2017 return would look if we were filing for 2018. Although it shows that a majority of our clients will pay less tax is 2018, I caution clients that since they are now taking more home in their paychecks due to the updated tax withholding charts each week throughout 2018, their 2018 refund will not necessarily be greater. Some clients are content with that, while others have asked about changing their withholding.”
Some specific TCJA changes contribute to clients making this an unusual season. For instance, Stoner has had many client conversations about “whether it will save them money to become a corporation, mainly S corps, especially sales people and members of the entertainment field,” he said. “At this rate, I may have an additional five to 10 corporations as clients just from these meetings by the end of 2018.”
“One of the biggest problems for individual taxpayers is that the new 2018 withholding tables are reducing the amount people pay in during the year. Many people will run into difficulties when they file their 2018 tax returns because their situation does not warrant a lowering of taxes or their estimated taxes are not counting on the correct amount of withholding,” Rosen said.
Despite this year’s confusion, clients are adaptable. “Individuals are getting used to the delay in receiving 1099s from the brokerage houses and are not as anxious to put together their tax information – which ultimately adds to the large influx of tax returns closer to the deadline,” said Scott Kadrlik, a CPA with Meuwissen, Flygare, Kadrlik & Associates in Eden Prairie, Minn.